We wanted to go through some common reasons as to why you can’t save for a deposit. So, let’s get into it.
- You don’t know how much you need
Ah, setting goals. We’ve all heard about needing to set goals before embarking on what we want to achieve, especially when its finance related.
However, there’s a reason for needing to know what you want to achieve and how long you it should take. Think about how much you’ll want to save, whether this is 10% or 20% of the prices of houses you’re looking at.
We know it can look like a scary number, but setting a goal of saving a certain amount each pay helps chip away at it. Know how much you can afford to put aside, then add to it whenever you see an opportunity.
- You’re not budgeting well enough
Yes, we mentioned you need to set your goal and put money away – but how can you do this efficiently? We’re about to throw that other word at you that’s bound to make you flinch. Budgeting.
It’s easy to say you need to put money away each pay, but how much? You don’t want to be putting in more than you can afford to, but you also don’t want to not put enough into savings that you might not reach your goal in your timeframe.
Knowing how much money you have coming in, versus how much that needs to come back out, will give you a good idea on how much you can comfortably put aside for the home deposit.
- You’re being unrealistic
You found out that you’d like to save 20% of a property worth $900,000. That’s $180,000 and not including any other costs associated with buying a property.
There’s no other way to say it, that’s a lot of money!
If it’s looking like it will take decades to reach your ideal deposit amount, it could mean you’re shooting for the stars.
This could mean you’d need to look at properties in more affordable areas for considering options such as using a guarantor or paying for Lender’s Mortgage Insurance (LMI).
- You have too many life expenses
You might have heard about ‘lifestyle inflation’ and how keeping up appearances is seriously costing Australians financially.
As good as it may feel in the moment, going out for those fancy dinners, after work drinks and buying the latest tech and fashion aren’t getting you any closer to your deposit goals.
Assess which unnecessary items you’re spending a chunk of money on and try to cut these down. Now we’re not telling you to give up all of those little luxuries, but assess how often and how much you’re spending on them.
If it seems to be food, maybe try a DIY food kit (there’s plenty of these new companies popping up all over the place) or try your hand at meal prepping for the week ahead.
Maybe try and limit yourself to after work drinks to one day a week or if it seems to be clothing, only shop for clothes once each season or buy clothing in neutral colours that will work with everything else in your wardrobe.
- You want your home, now
Again, this is probably another unrealistic goal. When you hear that buying a home is a long-term plan, it really is something you need to work towards consistently, over a long period of time.
If you’re wanting instant results, purchasing a property may not be ideal for you. You may also need to reconsider what your first property will be, rather than that large family home with 4 bedrooms and 2 bathrooms, it might be an apartment – and that’s okay!
It’s worthwhile looking at properties that ticks most of those boxes, rather than stretching yourself too thin for your dream home.
